North Korean Economy Watch

Korea Herald
7/8/2007

Japan should refrain from its hostile policy toward North Korea and actively take part in a six-party actions plan to achieve a nuclear-free Korean Peninsula, a pro-North Korean newspaper in Japan said Saturday.

Chosun Sinbo, a pro-North Korean newspaper published in Tokyo, said on Saturday that Japan should be out of the six-party discussions if it continues to avoid the energy assistance program.

Japan, a member of six-party nuclear disarmament talks, is at odds with North Korea over about a dozen Japanese citizens kidnapped by North Korean agents decades ago. Japan refuses to provide any economic aid to the North until the kidnapping issue is resolved.

Under a deal adopted on Feb. 13, North Korea is to receive 1 million tons of heavy fuel oil in exchange for shutting down its key weapons-related nuclear facilities. South Korea is responsible for the first shipment of 50,000 tons.

Yonhap
7/5/2007

The construction of a Pyongyang elementary school, funded by South Korean citizens, is to begin next month, officials said Thursday.

The project of reconstructing one of the four elementary schools in Pyongyang is being carried out at the North’s request, an official of the South Gyeongsang provincial government said.

“We have successfully collected contributions of a total amount of 987,000,000 won (US$1,070,500) from people of the province for building a Pyongyang elementary school,” the official said. “We are going to send the building materials soon to start the construction next month. We are aiming to complete it by the end of the year.”

South Gyeongsang Province has been cooperating with North Korea, especially in the agricultural area.

Governor Kim Tae-ho went to North Korea in April and took part in the ground-breaking ceremony for the school.

Yonhap
Sohn Suk-joo
7/4/2007

South and North Korea will hold new round of working-level talks this week to discuss ways to cooperate in light industry and natural resource exploration, the Unification Ministry said Wednesday.

The two-day talks slated to be held in the North Korean border city of Kaesong on Thursday come as North Korea moves to take initial steps to shut down its main nuclear facilities.

In April, South Korea reconfirmed the agreement to supply industrial materials worth US$80 million to the North starting in June to help revive its sagging light industry in return for the right to develp natural resources in the North.

Under the deal, North Korea will allow a team of South Korean experts to conduct an on-site survey of three zinc and magnesite deposits in its mountainous northeastern region for 12 days beginning June 25. In return, the South will ship 5 million tons of polyester fabrics worth $800,000 to the North on June 27.

But the schedule has been postponed as the two sides failed to thrash out differences on the price and list of industrial materials the South is to provide the North in exchange for the right to develop natural resources in the communist country. The North called for more than the South had earmarked for in the shipment, according to South Korean officials.

In 2005, South Korea agreed to offer industrial raw materials to the North to help it produce clothing, footwear and soap starting in 2006. In return, the North was to provide the South with minerals, such as zinc and magnesite, after mines were developed with South Korean investments guaranteed by Pyongyang.

But the economic accord was not implemented, as North Korea abruptly cancelled the scheduled test runs of inter-Korean cross-border trains in May last year, apparently under pressure from its powerful military. The two Koreas carried out the test run of trains across their heavily armed border in mid May.

Korea Times
Tong Kim
7/1/2007

Recently I visited Gaeseong with a South Korean humanitarian group that provides anthracite for fuel to underprivileged people in both Koreas. The group carries out a voluntary campaign in the name of “sharing love and anthracite.’’ It so far has provided the poor with over ten million pieces of processed anthracite.

Our trip to Gaeseong was to deliver another 50,000 pieces of processed anthracite in five large trucks. From Seoul we drove only about 45 minutes to reach the southern border of the Demilitarized Zone (DMZ). I had passed through the Panmunjeom Joint Security Area a couple of times traveling to Pyongyang before, but it was the first time for me to travel on the paved direct highway to the Gaeseong Industrial Complex.

Upon arrival at the Bongdukni railroad station _ about a few miles north of the complex _ we were welcomed by the vice chairman of the Gaeseong People’s Committee, who appreciated the provision of anthracite as well as our offer to help North Koreans unload the anthracite.

From Bongdukni we went to Gaeseong City, where we visited several famous historic sites of the old capital of the Goryeo Dynasty (918-1392), including the Seonjuk bridge, where the stain of bloodshed by a king’s royal servant remains, still detectable. Standing at the courtyard of Sungkyunkwan, which was the dynasty’s highest royal educational institute, were gigantic ginkgo trees more than a thousand years old.

The buildings were impressively well maintained. On display inside the buildings were neatly arranged historical artifacts, which help visitors see what life was like in Korea a millennium ago. With other cultural assets, like the royal tombs and an old Buddhist temple, I thought Gaeseong would present itself as an excellent tourist attraction.

Then we went to a “hotel district’’ where many traditional tiled Korean homes remain undamaged as if they had never withstood the Korean War. An able tourist guide told us that these buildings are now used as lodging for tourists. We were led into one of the homes, where we had a good traditional dinner served in Korean brassware.

From there we went to the complex, which I knew was controversial from a political perspective since its inception. Opponents ask why South Korea should help North Korea when it spends scare resources on the development of missiles and nuclear weapons. Proponents argue it is a constructive approach to the eventual resolution of security and political issues.

After I saw the vast area of the industrial park _ one million pyeong (approximately 25 square miles) _ I felt there would be no way to reverse the course of inter-Korean economic cooperation. Under a 50-year lease, Hyundai Asan has cleared the land by leveling off the hills and filling the rice paddies and fields, and it is still building the necessary infrastructure to support the industrial park.

At present 22 South Korean companies _ mostly small- and medium-sized firms _ are operating in the complex and five new plants are under construction. On this North Korean territory, about 12,000 North Korean employees are working with 680 South Koreans, who are largely managers. By 2012, the complex is expected to employ over 100,000 North Koreans.

These companies produce goods _ including shoes, clothes, watches, kitchenware, plastic containers and electric cords _ mostly for South Korean consumers. Under a neo-liberal policy pursued by the ROK government, the complex makes sense as the average monthly wage is only $57, which is only half of Chinese labor costs and less than 5 percent of South Korean counterparts’ salaries.

After an overview briefing at the Hyundai Asan Control Center, we went to the Shinwon Clothing Plant, where 880 North Korean women _ who looked between 20 to 40 years-of-age _ were working hard concentrating on their jobs along the 15 production lines on two floors. There were no dividing walls on each floor. The uniformed workers all looked healthy and productive.

The plant’s manager told me he has only nine people from the South to work with the North Koreans. His company began operating in February 2005 with 330 workers on two production lines. He said his company is satisfied with the productivity and the workmanship of its North Korean employees. His company provides many facilities for the workers, including a large dining hall where the workers receive free meals, recreation rooms, showers and even a Christian chapel.

Perhaps the future of the expanding industrial park depends very much on the exportability of its products to overseas markets including the United States. This brings up two points: resolution of the North Korean nuclear issue and the inclusion of the complex as an “outward processing zone’’ as discussed but still pending resolution in the agreed Free Trade Agreement with the United States.

Without exportability, which I doubt would be fully feasible before North Korean denuclearization, the industrial complex may not be able to attract big international companies who keep looking for lower labor costs to compete in the contemporary neo-liberal global market.

There are other problems with the inter-Korean industrial park, including the transparency of the payment system, labor practices and environmental concerns. But these are only peripheral issues compared to the issue of war and peace, which also affects the South Korean economy. As the nuclear issue seems to be moving forward, and as I believe it will be resolved at the end, I do see good prospects for success of the complex.

We went to Gaeseong, a city of 300,000 people, through some poverty-stricken rural villages. It was heartbreaking to see North Korean people who looked undernourished and poorly sheltered in their rundown homes with broken windows. I saw children looking skinny, underdeveloped and hungry _ walking home after school, with their arms on the shoulders of their buddies, just like I used to do when I was their age.

I visited North Korea many times but I never had an opportunity to observe the economic plight of the North Korean people in the rural areas. I could see only a little bit of the deprivation last month when I went to Inner Geumgang Mountain through a few under-populated villages beyond the DMZ.

I know the conservatives blame the North Korean regime for this. My problem with them is such blame or hard-line policy has not helped alleviate the hardship of the poor people whose poverty is not their fault. I support humanitarian aid to the North, despite some negative views.

I know North Korea is trying hard to improve its economy in order to better feed, clothe and house its people. I have seen some encouraging indicators of change in North Korea. Once it feels free of perceived threat from outside, I expect the North to give up its nuclear program and concentrate on transforming the economy, which will eventually lead to political and social transformation as well.

It is time to work harder to resolve the security issue, while providing minimum humanitarian aid to the people in the North. Providing anthracite is a good example of humanitarian assistance, which I believe should enlist broad support from the South Korean public. What’s your take?

Tong Kim is former senior interpreter at the U.S. State Department and now a research professor at Korea University and a visiting scholar at Johns Hopkins School of Advanced International Studies (SAIS).

Bloomberg
Hideko Takayama
6/28/2007

Kim Jong Il no longer supports the government of North Korea.

Kim is a 66-year-old businessman who owns a shoe factory in Kobe, Japan. In 1997, he resolved to switch his citizenship to South Korea from North Korea after deciding that “I could no longer support a government that allowed children to starve to death.”

Since then, thousands of North Korean residents in Japan have made the same decision. And that is bad news for the other Kim Jong Il — the one, no relation to the businessman, who has ruled North Korea since 1994.

For the last four decades, Japan’s North Korean residents have sent billions of yen in money and goods back home to their relatives and the Pyongyang regime. As more and more of them switch their allegiance to South Korea, they are choking off the flow of resources to an isolated and impoverished country already coping with trade sanctions.

While there is no way of knowing exactly how much they have sent, Katsumi Sato, director of the Modern Korea Institute in Tokyo, estimated that in the early 1990s, the annual total was some 60 billion yen ($600 million) in money and supplies.

“The cash and goods sent from Japan in the late 1980s were bigger than their national budget,” Sato said. “It was North Korea’s lifeline.”

Forced Labor

Japan was home to more than 600,000 Koreans in the 1970s, according to Japanese government figures. Roughly 330,000 were loyal to the South and 280,000 supported the North. They were the descendants of forced laborers Japan brought back from the peninsula during the era of colonial rule from 1910 to 1945, or Koreans who came to Japan looking for work.

South Korean residents now number about 400,000, according to the Korean Residents Union, a pro-South group. North Koreans are estimated at less than 50,000. The Chosensoren, an organization founded in 1955 to represent the interests of North Koreans who live in Japan, doesn’t disclose how many members it has.

One wave of North Koreans switched allegiance in the mid- 1990s after visiting their relatives and witnessing their suffering as a result of the famines that killed as many as 3 million people. Hundreds more switched when North Korea’s Workers Party secretary Hwang Jang Yop defected to South Korea in February 1997 and openly criticized Kim’s regime.

Demographic Forces

The shift reflects demographic as well as political forces. Older North Koreans are dying; some younger ones are becoming naturalized Japanese citizens. Other younger residents have fewer direct ties with their North Korean relatives and find other ways to spend their money.

One 27-year-old computer programmer dreamed of a honeymoon in Italy, then he hit a snag: He needed a fistful of time- consuming approvals and permits to travel. So he became a South Korean and heads to Italy this summer. He asked that his name not be used because he still has some loyalty to North Korea and feels uncomfortable about the switch.

Japan’s decade of recessions and slow growth has also taken a toll on the flow of cash and supplies sent to the homeland. Much of the money has come from North Korean residents running pachinko gambling halls, an industry with annual sales of 28 trillion yen ($231 billion), according to the Japan Productivity Center for Socio-Economic Development. But even these popular parlors have felt a financial pinch.

Seeking Protection

In April, a pachinko chain owned by a former North Korean resident and known as Daiei — no relation to Kobe-based retailer Daiei Inc. — filed with the Tokyo District Court for protection from creditors under the Civil Rehabilitation Law.

“With the slump in Japan’s economy, many North Koreans here lost their businesses,” Kazuhiro Kobayashi, who wrote “Kim Jong Il’s Big Laugh” and other works on North Korea, said in an interview. “I believe the amount of funds flowing to the North from Japan is less than a twentieth of what it was.”

One sign of North Korea’s woes: Last week, the Tokyo District Court ordered the Chosensoren to pay 62.7 billion yen to cover unpaid debt or face the seizure of its headquarters in lieu of payment.

In the past, the Chosensoren might have collected money from North Korean residents in such a situation. That’s now much more difficult, not only because of the North Korean business failures, but also because many residents criticize the organization for serving as a watchdog or even a branch office of the government in Pyongyang.

Medical Supplies

North Korea has also found it increasingly difficult to transport cash, medical supplies, clothing and other goods from its residents in Japan.

In the past, most of this cargo would travel on the North Korean vessel Mangyonbong, which docked on Japan’s northwestern coast. The ship also carried 90 percent of the parts for North Korean missiles, according to testimony in 2003 before a U.S. Senate subcommittee by a North Korean engineer who defected.

After North Korea test-fired several missiles over the Sea of Japan in July 2006, Japan banned the Mangyonbong from its ports. It banned all other North Korean ships after the underground nuclear test last October, as part of its economic sanctions.

The flow of North Koreans changing citizenship shows no sign of abating. In Tokyo alone, residents have been switching at a rate of roughly 100 a month since 2006, according to statistics from the South Korean consulate in Tokyo. In February 2007, the latest month available, 120 switched.

For Bae Soo Hong, the 46-year-old president of a construction company near Osaka, it was Kim Jong Il — the ruler, not the businessman — who made him decide to change.

When Kim acknowledged during a 2002 meeting with Japanese Prime Minister Junichiro Koizumi that North Korea had abducted Japanese citizens, “I knew it was time,” Bae said. He became a South Korean citizen this month.

Washington Post, Page A18
Colum Lynch
6/24/2007

Over the past six months, the Bush administration has repeatedly criticized the U.N. Development Program for channeling millions of dollars in hard currency into North Korea to finance the agency’s programs, warning that the money might be diverted to Pyongyang’s nuclear weapons program.

But the United States also has funneled dollars to Kim Jong Il’s regime over the past decade, financing travel for North Korean diplomats and paying more than $20 million in cash for the remains of 229 U.S. soldiers from the Korean War. And in a bid to advance nuclear talks, the Bush administration recently transferred back to North Korea about $25 million in cash that the Treasury Department had frozen at Banco Delta Asia, a Macao-based bank that the United States had accused of laundering counterfeit U.S. currency on behalf of North Korea.

Such transactions emphasize philosophical differences in the administration over the wisdom of engaging with North Korea and highlight the compromises that the United States, the United Nations and others face in dealing with Pyongyang.

“The U.S. has no moral high ground,” said Michael Green, a former special assistant to President Bush who served as senior director for Asian affairs in the National Security Council. “In terms of bribing Kim Jong Il, UNDP is a minor offender.”

North Korea’s regime has skillfully extracted hundreds of millions of dollars in bribes from foreign companies and governments, and has persuaded South Korea and China to supply billions of dollars’ worth of food and fuel with virtually no oversight. South Korea reportedly paid hundreds of millions to bribe the North Korean leader to attend a 2000 summit, and China agreed in 2005 to build a $50 million glass factory for North Korea in exchange for its participation in six-nation nuclear talks.

Such payments are “part and parcel of doing business in North Korea,” said L. Gordon Flake, executive director of the Mansfield Foundation, a nonprofit organization that promotes U.S. relations with Asian countries.

Since 1995, the United States has provided the North Korean regime with more than $1 billion worth of food and fuel in the hopes of forestalling famine — and of restraining Kim’s nuclear ambitions. In an effort to promote diplomatic contacts between the two countries, the Energy Department has channeled money to U.S. nonprofit agencies and universities, including a $1 million grant to the Atlantic Council to cover travel costs for informal talks between U.S. and North Korean diplomats.

U.S. military officials routinely traveled to North Korea’s demilitarized zone between 1996 and 2005 to give cash to North Korean army officers for the recovery of the remains of 229 of the more than 7,000 U.S. troops missing in North Korea since the Korean War. “There was a painstaking transfer process: cold, hard cash, counted carefully, turned over carefully,” said Larry Greer, spokesman for the Pentagon’s Prisoner of War/Missing Personnel Office.

Greer insisted that the payments, which covered labor, material and other expenses, were in line with recovery operations in other parts of the world. But he and other officials said North Korea frequently tried to inflate the costs and once requested that the U.S. military build a baby-clothing factory. The United States demurred, he said.

The Bush administration dramatically scaled back U.S. assistance to North Korea in 2002, but it continued to finance the effort to recover remains of Korean War veterans until 2005, when the U.S. military said it could no longer ensure the safety of U.S. recovery teams. Between 2002 and 2005, the United States flew a seven-member North Korean team, at a cost of $25,000 a year, to Bangkok for discussions about future recovery missions, according to the Congressional Research Service.

“It’s pretty close to a ransom of remains,” said James A. Kelly, U.S. assistant secretary of state for East Asian and Pacific affairs, adding he had little confidence that Washington could account for how the money was spent. “I personally didn’t like it, but I didn’t feel it was enough to get into a big squabble with the veterans organizations that felt strongly about it.”

Mark D. Wallace, the U.S. representative to the United Nations for administration and reform, lambasted the U.N. Development Program earlier this year for engaging in similar practices. For instance, he faulted the UNDP for flying a North Korean official in business class to New York at a cost of $12,000 to attend a meeting of the U.N. agency’s board of directors.

His complaints triggered a preliminary U.N. audit this month that confirmed that the UNDP had failed to abide by its rules by hiring workers handpicked by the North Korean government and paying them in foreign currency.

The UNDP operated for years “in blatant violation of U.N. rules [and] served as a steady and large source of hard currency” for the North Korean government, Wallace said. The UNDP’s efforts, he added, have been “systematically perverted for the benefit of the Kim Jong Il regime, rather than the people of North Korea.”

The controversy led the UNDP to suspend its North Korean operations in March after the government refused to allow it to independently hire staff members. The World Food Program and the U.N. Children’s Fund — which also pay government-supplied workers in foreign currency — remain active in North Korea.

Wallace has expanded his inquiry, alleging in congressional briefings that North Korea diverted nearly $3 million in UNDP cash to purchase real estate in France, Britain and Canada. He also contended that the UNDP received tens of thousands of dollars in counterfeit U.S. currency and imported sensitive “dual use” equipment into North Korea that could be used for a weapons program. The United States claims to possess internal UNDP documents to back up the claims but has refused to turn them over.

UNDP spokesman David Morrison said that the allegations “don’t seem to add up” and that the United States has not substantiated its assertions. He said the agency can account for the $2 million to $3 million it spends each year on its North Korea programs. UNDP officials said the dual-use equipment — which included Global Positioning System devices and a portable Tristan 5 spectrometer available on eBay for $5,100 — was part of a weather forecasting system for flood- and drought-prone regions.

“We have been subject to all manner of wild allegations about wide-scale funding diversion,” Morrison said.

U.S. officials said there is no link between criticism of the UNDP and U.S. efforts to restrain North Korean nuclear ambitions. “If I were a conspiracy theorist, I would think that way, but there is really no connection,” said a senior U.S. official who tracks the issue.

Daily NK
6/14/2007

At the North and South Korea’s agricultural cooperation-related symposium sponsored by World Vision, in commemoration of the opening of the North Korea Agricultural Research Institute (Chief Park Hyo Geun), the Senior Researcher of Korea Rural Economic Institute Agricultural Researcher Kwon Tae Jin emphasized, “North Korea’s action, while ignoring the reality of aid organizations, of requesting or intervening in aid for development is an action which ignores international norms and processes.”

Researcher Kwon did acknowledge the necessity of change from an emergency aid form to aid for development.

However, he insisted, “If it is doubtful whether or not North Korea, while requesting a conversion to aid for development, is truly prepared to receive development aid, then the propriety of such aid and transparently showing the goal and content in addition to the process and means of monitoring as well as institutional equipping for evaluating the results should take place.”

Researcher Kwon pointed out that support to North Korea has played a positive role in preserving supply and demand of food provisions and the open and reform of North Korea, but the problem of not providing sufficient information to patrons and the failure to promise transparency has been exposed.

Further, regarding support for North Korea, he maintained that our government has caused tension by pursuing aid projects while failing to solidify the chemistry of citizens and choosing means of pursuing projects sporadically according to political reasoning.

On one hand, Researcher Park Hyo Geun pointed out, “The principal issue of North Korean agriculture is that the poor are not able to escape the cycle of poverty. The weakening of productivity of labor is sustaining the cycle of poverty of the destitute.”

Chief Park pressed, “When the February 13 agreement is actualized and the North Korean nuclear issue becomes resolved, domestic support for North Korea will increase epochally. The influence that support for North Korea will have on South Korea’s agricultural industry should greatly be considered.”

Yonhap
6/11/2007

South Korea will complete shipments of 300,000 tons of fertilizer aid to North Korea late this month, the Unification Minister said Monday.

“As of last week, 233,800 tons of fertilizer had been shipped to North Korea. By June 20, the planned shipments will be completed,” said a ministry official on the usual condition of anonymity.

South Korea resumed shipments of fertilizer and other emergency aid to the North in late March, but it withheld rice aid as an inducement for North Korea to fulfill its promise to shut down its main nuclear reactor as part of the landmark February 13 agreement.

South Korea suspended its food and fertilizer aid to North Korea after the North conducted missile tests in July. Resumption of the aid was blocked due to the North’s nuclear bomb test in October.

According to a recent think tank report, North Korea could run short of up to one third of the food it needs this year if South Korea and other countries withhold aid.

Data from the World Food Program and the Unification Ministry show that the North will need between 5.24 million tons and 6.47 million tons of food this year. Depending on the weather, the availability of fertilizer and other factors, the communist state may only be able to produce 4.3 million tons of food by itself, the report said.

Daily NK
Han Young Jin
6/8/2007

On March 7th a tidal wave hit Soehan Bay on the West Sea, which is bounded by Cholsan, Yongcheon and Sunchon in North Pyongan, leaving 2 thousand flood casualties and around 1 hundred dead. Many were gathering sea shells, according to several sources in North Korea who said the news was released late on instructions to cover up the damage.

Flooded regions include Dosan-ri and Bosan-ri in Yongchoen, Okok-ri in Cholsan, Shinmee Island in Sunchon, with the worst suffering in Dosan-ri in Yongchoen. The damage done by the giant wave came in a flash and was worsened by the lack of weather forecasting and early warning systems.

North Korean authority has not informed the outside world of the tidal wave. However, the South Korean government reportedly has been apprised.

Receiving information from a people’s unit chairperson, a source in Yongcheon said that “people in Dosan-ri and Bosan-ri in Yongcheon make living by collecting sea shells, and around 70 households were affected.” Another source said that the dead included fishermen fishing in the coastal sea of Cholsan, women, and students collecting seashells.

Collecting seashells in North Korea is done by boarding a boat on a coastal sea as the tide rises. When it ebbs, people get off the boat and collect seashells on the foreshore. As the tide rises again, they need to get back on the boat. This practice caused the death toll to rise. The dead included young students who began school in March, who were helping their parents in other cities make a living.

After the incident, the local social safety agency began an investigation and delivered the order not to speak about it. Information would flow through the chairpersons of people’s units. North Korean authority usually broadcasts such news over its central broadcasting network, organizing rescue units from the whole country.

The chairpersons of the people’s units investigated the missing persons and compensated the families of victims with Chinese color television sets, according to the source. A source in Dandung, China said the incident was not reported there as no bodies or boat debris had been found.

UNDP welcomes the preliminary report (DPRK-prelimauditreport-20070601.pdf) of UN Board of Auditors (UNBOA) on the operations of UNDP and other UN agencies in DPRK.  UNDP has cooperated fully with the audit process and will continue to do so. 

UNDP operated in DPRK at the express wish of its Executive Board.  Member states encouraged UNDP to assist the country to engage progressively with the norms and standards of the global community. 

The operating environment was very difficult.  In recent years UNDP tightened control mechanisms and conducted frequent audits (1999, 2001 and 2004).  These audits did not lead to any suggestion that UNDP funding was being diverted to purposes other than those for which it was intended. 

UNDP is encouraged that the UNBOA preliminary report confirms:

– That UNDP operated a relatively modest programme in DPRK ($2-3 million per year – far less than “$100s of millions” alleged in press reports)
– That UNDP international staff could – and did – regularly visit project sites to verify how UNDP funding was being used

The preliminary report also highlights specific aspects of the difficult operating environment in DPRK, including staffing and foreign currency arrangements not in line with worldwide practice.  UNDP notes that:

– The Executive Board knew of UNDP’s staffing practices in DPRK, which date back 27 years
– Similar staffing and foreign currency practices were followed by all UN agencies, international NGOs and foreign diplomatic missions in DPRK, including past and current members of UNDP’s Executive Board
– UNDP was not able to follow worldwide practice, but no UNDP regulations or rules were broken
– Following requests by some Board members, UNDP notified DPRK that it was changing its staffing and currency practices.  The proposed changes were formally endorsed by the Executive Board in January 2007
– UNDP suspended operations in the country on 2 March 2007 when DPRK failed to meet the operational changes endorsed and mandated by the Board.
– UNDP took the lead in asking the DPRK government to conform to international practice before the Board’s decision  

The report highlights areas in which UNDP rules or procedures could be strengthened.  UNDP is committed to addressing these areas.

UNDP will be transmitting a formal management response to the ACABQ shortly.  UNDP would welcome a continuation of the audit process, including a visit by the UNBOA to DPRK.  UNDP looks forward to the final audit report.